An 83(b) election lets a founder or employee pay ordinary income tax on restricted stock at its value on the day it's granted, rather than as it vests, locking in a usually much lower tax basis while the stock is still worth close to nothing.
Without the election, tax is owed on the value of each tranche as it vests, which can mean a large, unplanned tax bill years later if the company's value has grown significantly by then. Filing early, while the stock's fair market value is at its lowest, trades that risk for a small, known cost paid upfront.
The catch is the deadline. The IRC §83(b) filing deadline is a hard 30-day cutoff from the grant date, no extensions, no exceptions for missing it by even a day. It's one of the few tax elections where being a week late doesn't mean a penalty; it means the election simply doesn't exist anymore for that grant.
An 83(b) election is for stock you own now that can still be taken back if you leave, usually founder stock on a vesting schedule, or options you exercise early, before they vest. It doesn't apply to stock options you haven't exercised or to RSUs.
Normally, tax on restricted stock is owed as it vests, on whatever the shares are worth at that point. The election tells the IRS to tax it all now, at today's value, instead.
At formation, founder stock is usually bought for its fair market value, often a fraction of a cent a share. If you paid full value, the taxable amount under an 83(b) is zero: you owe nothing, and you've locked in the low value.
Skip it, and each vesting date is a taxable event at the new value. If the company has raised and the shares are worth real money by then, that's ordinary income you owe tax on, in cash, for stock you can't sell yet.
Filing also starts two clocks at the grant date instead of each vesting date: the one-year clock for long-term capital gains, and the holding period for QSBS.
Illustrative: uses the same 32% blended rate as our 83(b) calculator and ignores state tax. Your rate and the stock's value at each vesting date change the result.
30 days from the date the stock is transferred to you, usually the grant or purchase date. There are no extensions, and a late election isn't valid.
Yes. Since July 2025, the IRS lets you file Form 15620 online through your IRS account, signing in with ID.me. You can still mail a paper election instead.
The election can't be made for that grant. Tax is owed at each vesting date on the stock's value then, and your capital gains and QSBS holding periods start at each vesting date instead of the grant. Talk to a CPA about any options that remain.
Not for options you haven't exercised or for RSUs; the election doesn't apply to them. It does apply if you exercise options early, before they vest, which some startup plans allow.
Only on the difference between what the stock is worth and what you paid. Founders who buy their shares at full value at formation usually owe nothing.
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